{"id":2714,"date":"2018-03-14T14:13:11","date_gmt":"2018-03-14T13:13:11","guid":{"rendered":"https:\/\/www.asd-int.com\/?p=2714"},"modified":"2020-06-03T14:18:38","modified_gmt":"2020-06-03T12:18:38","slug":"vat-reverse-charge-vat-refunds-outstanding","status":"publish","type":"post","link":"https:\/\/www.asd-int.com\/en\/vat-reverse-charge-vat-refunds-outstanding\/","title":{"rendered":"VAT reverse charge : VAT refunds outstanding"},"content":{"rendered":"

Normally, European companies that carry out taxable operations in other European Union member countries, are required to identify themselves for VAT in those countries. In order to fight against the VAT fraud, also known as\u00a0carousel fraud<\/b>, the\u00a0directive 2006\/112\/CE<\/a>\u00a0allows the European Union member countries to adopt the\u00a0VAT reverse charge<\/b>\u00a0system.<\/p>\n

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The principle of the VAT reverse charge imposes on foreign companies not to charge VAT to companies that are based in the country of the transaction. It is up to the latter to declare VAT to the tax authorities of their own countries.\u00a0<\/span>If, however, a foreign company makes local purchases or imports goods from its client’s country, it stays liable for VAT and must apply for a refund from the country of the transaction.<\/span><\/p>\n

Example: a French company makes local purchases or imports goods from Bologna, Italy, and then sells them to its client in Rome. Because of the logistical costs, the goods will be sent directly from the supplier’s premises or the place of importation in Bologna, to the client in Rome.<\/span><\/em><\/p>\n

In this operation, the supplier in Bologna will send his total invoice (taxes included) to the French company, – the invoice which will be established according to the Italian VAT rate-, or the French society will pay the Italian VAT at the moment of the importation to the Italian customs authorities.\u00a0<\/span>Therefore, the French company will have to issue a tax-exclusive invoice to its client in Rome, in accordance with the reverse charge system imposed by the Italian state. Indeed, this scheme is not considered as an i<\/span>ntra-Community delivery<\/b><\/span><\/span>, but as a domestic operation in Italy, because the goods do not leave the Italian territory.<\/span><\/p>\n

Applying for the VAT recovery<\/b><\/span><\/span>: the VAT payed by<\/span>\u00a0the French company<\/span>\u00a0will have to become subject of a request for refund from the tax authorities of the place where the VAT was imposed, in our example, from the Italian state.<\/span>
\nDepending on the activities that the French society conducts in Italy, it will have to submit its\u00a0application for the refund<\/a>\u00a0according to 2 separate directives:<\/span><\/p>\n